Dive Brief:
- Maersk Line will sell its Brazilian unit, Mercosul Line, to CMA CGM, according to a press release. The sale completes a divestment requirement by the European Union, which had previously expressed concerns over Maersk' share of container services to Brazil.
- Acquiring Mercosul will enable CMA CGM to bolster its service to and from South America, especially in Brazil, a developing market. CMA CGM’s strategy involves greater cabotage along with improved logistics.
- Regulatory approval from the Brazilian government has not yet been granted. The deal is subject to the clearance of Maersk Line's deal with Hamburg Sud, which may not be reached until Q4 2017.
Dive Insight:
The shipping industry's consolidation over the past decades has largely revolved around two types of deals: alliances, wherein slot and network sharing agreements are solidified, and mergers or acquisitions.
As the third largest global shipping line by capacity, it is no surprise that CMA CGM purchased Mercosul. The Brazilian's line's four fleets occupy 21% of Brazil's controlled shipping market, recording revenues of $128 million. This deal complements a relatively strong CMA CGM presence in Latin America. In addition to the line's roughly 23 services to South America, the CMA CGM Group also owns APL (formerly American President Lines) which boasts 10 services to the region, plus various feeder services.
Four ships of 2,500 TEU capacity each will not heavily affect CMA CGM's capacity, but it will allow the group to offer more complete services both within South America, and to the region from abroad. This, in turn, maintains the line's position as a global shipping leader.
